The Pulse | Economy | South Asia

Gulf War 3.0: How Is India Securing Its Oil Supplies?

India’s limited reserves, thin domestic production capacity, and mounting oil import dependence leave it extremely vulnerable should the war in West Asia continue.

India, the world’s third largest consumer of crude oil, which is heavily reliant on imports to meet its oil requirements — imports account for nearly 87 percent of its consumption — now finds itself in a vulnerable position as the war in West Asia intensifies.

According to a Standing Committee on Petroleum and Natural Gas report released in December 2024, over 60 percent of Indian crude oil imports come from countries in the Persian Gulf, mainly Iraq, Saudi Arabia, Kuwait, and the UAE — countries that have been drawn into the war. Crude from these countries is carried in tankers and must cross the Strait of Hormuz to enter the Arabian Sea and then reach India.

The 2024 report was prophetic; it warned that India’s dependence on any one region for crude oil and gas poses a risk to its energy security, necessitating immediate steps toward greater diversification. The report also noted that due to the Indian government’s concerted efforts at diversification of crude oil sourcing in recent decades, dependence on the Gulf for crude imports had significantly reduced from 72 percent in 2017-18 to 63 percent. Yet India remains heavily dependent on the Gulf region for its oil supplies. It is also worth noting that while India has been able to expand its basket of oil suppliers from 27 countries (in 2006-07) to 40, its refineries are designed for crude coming from West Asia.

With the war in West Asia escalating,  India’s reliance on the Strait of Hormuz — which is now effectively closed to commercial shipping due to Iranian attacks — to transport this oil into the Arabian Sea is an additional vulnerability.

Before the outbreak of the Iran war, roughly half of India’s crude imports used to come through the Strait. In a statement made to the Lok Sabha, India’s Minister for Petroleum and Natural Gas Hardeep Singh Puri explained that India has increased non-Hormuz sourcing to approximately 70 percent of crude imports, up from 55 percent before the war began. Although the minister did not share details on how this was achieved, it is likely attributable to India’s increased purchases of Russian oil, which is generally shipped through the Mediterranean, the Suez Canal, and the Red Sea to reach the Indian west coast, bypassing the West Asian sea routes.

According to local media reports, Indian refiners are also negotiating for additional crude cargoes from the United States and West Africa, in addition to Russia.

India reportedly purchased 30 million barrels of Russian crude at premiums of $2 to $8 per barrel over the Brent benchmark, in stark contrast to the heavily discounted rates being offered before the outbreak of hostilities in West Asia. This came after the U.S. granted India a 30-day waiver to “allow” imports of Russian oil stranded at sea, in a bid to stabilize global oil market prices. Indian purchases of Russian oil — which peaked following the outbreak of the Russia-Ukraine war in 2022 — dropped markedly in January, largely due to U.S. pressure, which included a 25 percent punitive tariff on Indian goods imported to the U.S., for transactions with Moscow. Last month, India implicitly agreed to end Russian oil purchases in exchange for a trade deal with Washington. Before the outbreak of war in West Asia, these purchases were expected to continue to decline.

Now that Washington is offering this waiver to all countries, several East Asian countries, including Japan, are looking to buy Russian oil, and Indian refiners are likely to face stiff competition to secure Russian oil supplies amid surging global crude oil prices.

Meanwhile, India has been trying to secure guarantees from Tehran to ensure safe passage for 27 Indian flagged ships stranded in the Persian Gulf.

On March 11, a Liberia-flagged tanker carrying crude from Saudi Arabia docked in Mumbai, making it the first India-bound vessel to navigate through the Strait of Hormuz since the start of the war. The ship reportedly turned off its Automatic........

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